|
Filed
by the Registrant x
|
||
|
Filed
by a Party other than the Registrant o
|
||
|
Check
the appropriate box:
|
||
|
x
|
Preliminary
Proxy Statement
|
|
|
o
|
Confidential,
for Use of the Commission Only (as permitted by Rule
14a-6(e)(2))
|
|
|
o
|
Definitive
Proxy Statement
|
|
|
o
|
Definitive
Additional Materials
|
|
|
o
|
Soliciting
Material Under Rule 14a-12
|
|
|
Payment
of Filing Fee (check the appropriate box):
|
||||
|
x
|
No
fee required.
|
|||
|
o
|
Fee
computed on table below per Exchange Act Rules 14a-6(i)(1)
and 0-11.
|
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(1)
|
Title
of each class of securities to which transaction
applies:
|
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(2)
|
Aggregate
number of securities to which transaction applies:
|
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(3)
|
Per
unit price or other underlying value of transaction computed pursuant
to
Exchange Act Rule 0-11:
|
|||
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(4)
|
Proposed
maximum aggregate value of transaction:
|
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(5)
|
Total
fee paid:
|
|||
|
o
|
Fee
paid previously with preliminary materials:
|
|||
|
o
|
Check
box if any part of the fee is offset as provided by Exchange Act
Rule 0-11(a)(2) and identify the filing for which the offsetting fee
was paid previously. Identify the previous filing by registration
statement number, or the Form or Schedule and the date of its
filing.
|
|||
|
(1)
|
Amount
Previously Paid:
|
|||
|
(2)
|
Form,
Schedule or Registration Statement No.:
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(3)
|
Filing
Party:
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(4)
|
Date
Filed:
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To
the Stockholders of American Telecom Services,
Inc.
|
|
Adam
Somer,
Secretary
|
|
·
|
the
sale, issuance, or potential issuance by the issuer of common stock
(or
securities convertible into common stock) at a price less than the
greater
of book or market value which together with sales by officers, directors
or principal shareholders of the issuer equals 20% or more of presently
outstanding common stock; or
|
|
·
|
the
sale, issuance, or potential issuance by the issuer of common stock
(or
securities convertible into common stock) equal to 20% or more of
presently outstanding stock for less than the greater of book or
market
value of the stock.
|
|
Ranking
|
Shares
of our Series A preferred stock, with respect to dividend rights
and
rights upon our liquidation, winding up or dissolution, rank:
· Senior
to our common stock and any other class or series of our preferred
stock,
the terms of which do not expressly provide that such class or series
ranks senior to or on a parity with the Series A preferred
stock;
· On
a parity with any other class or series of our preferred stock, the
terms
of which expressly provide that such class or series ranks on a parity
with the Series A preferred stock; and
· Junior
to all our existing and future debt obligations and to each class
or
series of our preferred stock, the terms of which expressly provide
that
such class or series ranks senior to our Series A preferred
stock.
|
|
Dividends
|
Holders
of our Series A preferred stock will receive cumulative dividends
of $200
per share, payable semi-annually in arrears, commencing June 15,
2007,
when, as and if declared by our board of directors. Dividends
will be paid in cash on the basis of a 360-day year consisting of
twelve
30-day months. Dividends on the shares of our Series A
preferred stock will accumulate and be cumulative from the date of
original issuance. Accumulated dividends on the shares of our
Series A preferred stock will not bear any interest.
If
we fail to pay, or set apart funds to pay, dividends on the shares
of our
Series A preferred stock for any semi-annual dividend period, or
if we
fail to cause a resale registration statement for the shares of our
common
stock underlying our Series A preferred stock and warrants within
180 days
of January 30, 2007, then holders of shares of our Series A preferred
stock will be entitled to receive, when, as and if declared by our
board
of directors, out of funds legally available therefore, dividends
at the
rate of 12% per annum for each subsequent semi-annual dividend period
until we have paid or provided for the payment of all dividends on
the
shares of our Series A preferred stock for all dividend periods up
to and
including the dividend payment date on which the accumulated and
unpaid
dividends are paid in full, or until we have satisfied our registration
obligations, as applicable.
No
dividend or other distributions (other than a dividend payable solely
in
shares of a like or junior ranking) may be paid or set apart for
payment
upon any parity shares or junior shares, nor may any parity shares
or
junior shares be redeemed or acquired or any consideration by us
(except
by conversion into or exchange for shares of a like or junior ranking)
unless all accumulated and unpaid dividends have been paid or funds
have
been set apart on our Series A preferred stock and any parity
shares.
To
pay dividends, we must pay the dividends out of funds legally available
for payment.
|
|
Liquidation
Preference
|
$2,500
per share. In addition, upon any liquidation event, we will pay
any accumulated and unpaid dividends.
|
|
Conversion
Rights
|
Each
share of our Series A preferred stock may be converted at any time,
at the
option of the holder, into 588.2353 shares of our common stock (which
is
|
| equivalent to an initial conversion price of $4.25 per share of Series A preferred stock), plus cash in lieu of fractional shares. The conversion rate is subject to adjustment upon the occurrence of certain events. | |
|
Mandatory
Redemption
|
We
are required to redeem our Series A preferred stock, to the extent
not
theretofore converted into shares of our common stock, on January
30, 2012
for cash at a redemption price per share of $2,500, plus all accumulated
but unpaid dividends thereon through the redemption
date.
|
|
Optional
Redemption
|
At
any time following the date that is twelve months from the date the
Securities and Exchange Commission declares our resale registration
statement covering our shares of common stock issuable upon conversion
or
exercise, as applicable, of our Series A preferred stock and warrants
effective, we may redeem all or any portion of our Series A preferred
stock at any time and from time to time if (i) the market price of
our
common stock exceeds $7.50 for at least 30 consecutive trading days
prior
to the conversion date; (ii) all our shares of common stock issuable
upon
conversion or exercise, as applicable of our Series A preferred stock
and
warrants are registered for resale pursuant to the Securities Act;
(iii)
no resale restrictions exist on such shares. Such registration
will take the form of a continuously effective resale registration
or such
other arrangements as are reasonably satisfactory to the holders
of the
Preferred.
|
|
Adjustments
to Conversion Price and Exercise Price of Warrants
|
The
conversion price of the Series A preferred stock and the exercise
price of
the warrants and the number of shares subject thereto shall be subject
to
adjustment in the event of stock splits, stock dividends, reverse
stock
splits, and similar events. Further, in the event that we
should issue shares of common stock, warrants, options, convertible
and/or
exercisable securities, at an effective price per share less than
the
conversion price, then, subject to certain exceptions, the conversion
price and the exercise price and the number of shares subject to
the
preferred stock and warrants shall be adjusted on a weighted average
basis
to reflect the dilution represented by the issuance of such shares
of
common stock and such lower effective price on a fully-diluted
basis.
|
|
Voting
Rights
|
Holders
of Series A preferred stock shall be entitled to vote, on an as converted
basis, on all matters as to which the holders of common stock are
entitled
to convert.
In
addition, so long as 40% of our Series A preferred stock remains
outstanding, the following actions, among others, shall require the
approval of holders of a majority of our Series A preferred stock,
voting
separately as a class:
· any
liquidation, dissolution or winding up of our business;
· any
amendment, alteration or repeal of any provision of our certificate
of
incorporation or bylaws in a manner that adversely affects the powers,
preferences and rights of the Series A preferred stock or that is
otherwise material;
· the
creation, or authorization, or issuance of any additional class or
series
of our capital stock unless the same ranks junior to our Series A
preferred stock;
· the
purchase or redemption or payment of any dividends or distribution
on any
shares of our capital stock other than (i) dividends or distributions
on
our Series A preferred stock, (ii) redemption of our currently outstanding
publicly traded common stock purchase warrants, and (iii) dividends
or
other distributions payable on our junior securities solely in the
form
of
|
|
additional
junior securities;
· the
creation or incurrence of any indebtedness other than, among other
exceptions, (i) our credit line with CIT; (ii) capital lease obligations
in excess of $15 million; and (iii) upon letters of credit issued
in the
ordinary course of our business;
· subject
to certain exceptions, the creation or incurrence of any
liens;
· our
entry into any material line of business outside of the telecom
sector;
· our
entry into any transaction or agreement with any of our executive
officers, directors or their respective affiliates except for those
(i) in
existence on January 30, 2007 or (ii) relating to employment and/or
consulting agreements to the extent that they have been approved
by a
majority of our board of directors (including the majority vote of
our
independent directors) and provide for consideration consisting solely
of
cash and/or securities junior to the Class A Preferred Stock;
· any
increase in the aggregate number of shares of our capital stock issuable
under all of our option, stock purchase or other equity-based plans
in
excess of 10% of our outstanding shares of common stock at the time
of the
proposed increase;
· capital
expenditures in excess of $1 million in the aggregate in any fiscal
year
if such excess was not reflected in our budget for such fiscal
year;
· subject
to certain exceptions, the acquisition of any securities, assets
or
business of any person; or
· the
taking of any action which will result in the failure of our common
stock
to be traded, listed or quoted on a national securities exchange
or
quotation system whose rules and regulations require that a majority
of
the board of directors of member corporations be comprised of individuals
who are “independent” as defined by such exchange or quotation system and
by the Sarbanes-Oxley Act of 2002. |
|
|
Fundamental
Change
|
If
a fundamental change occurs, a holder of Series A preferred stock
may
require us to purchase all or part of such holder’s shares of our Series A
preferred stock at a redemption price equal to 100% of the liquidation
preference of the shares of our Series A preferred stock to be
repurchased, plus accrued and unpaid dividends to but excluding the
repurchase date, if any.
|
|
Name
and Address of Beneficial Owner
|
Number
of
Shares
of
Common
Stock
Beneficially
Owned
(1)
|
Percent
of
Common
Stock
|
||
|
Lawrence
Burstein
245
Fifth Avenue
Suite
1600
New
York, New York 10016
|
252,006 (2)
|
3.3%
|
||
|
Bruce
Hahn
|
797,900(3)
|
12.3%
|
||
|
Adam
Somer
|
220,000(4)
|
3.4%
|
||
|
Yu
Wen Ching
|
674,000(5)
|
10.4%
|
||
|
Robert
F. Doherty
|
33,790(6)
|
*
|
||
|
Elliott
J. Kerbis
|
50,441(7)
|
*
|
||
|
Donald
G. Norris
|
25,735(8)
|
*
|
||
|
Robert
S. Picow
|
42,470(9)
|
*
|
||
|
I
NET Financial Management, Ltd.
No. 17-1,
Alley 3, Lane 217
Chung
Hsiao E. Road
Sec.
3, Taipei, Taiwan, R.O.C.
|
674,000(10)
|
10.4%
|
||
|
Jack
Silver
660
Madison Avenue
New
York, New York 10021
|
580,000(11)
|
8.5%
|
||
|
The
Future, LLC
417
Lucy Street
Henderson,
Nevada 89015
|
361,000(12)
|
5.6%
|
||
|
Credit
Suisse
11
Madison Avenue
New
York, New York 10010
|
1,647,048
(13)
|
20.2%
|
||
|
All
current executive officers, directors as a group (9
persons)
|
1,280,465(14)
|
19.1%
|
|
*
|
Less
than 1%.
|
|
(1)
|
As
used in this table, beneficial ownership means the sole or shared
power to
vote, or direct the voting of, a security, or the sole or shared
power to
invest or dispose, or direct the investment or disposition, of a
security.
Except as otherwise indicated, based on information provided by the
named
individuals, all persons named herein have sole voting power and
investment power with respect to their respective shares of our common
stock, except to the extent that authority is shared by spouses under
applicable law, and
|
|
|
record
and beneficial ownership with respect to their respective shares
of our
common stock. With respect to each securityholder, any shares issuable
upon exercise of options and warrants held by such securityholder
that are
currently exercisable or will become exercisable within 60 days
of October
___, 2007 are deemed outstanding for computing the percentage of
the
person holding such options, but are not deemed outstanding for
computing
the percentage of any other person.
|
|
(2)
|
Includes
38,000 shares of common stock owned by Unity Venture Capital Associates
Ltd., of which Mr. Burstein is President. Also includes 23,529 shares
of common stock issuable upon conversion of our Series A preferred
stock,
12,500 shares of common stock issuable upon exercise of options and
67,745
shares of common stock issuable upon exercise of warrants. Does not
include 25,000 shares of common stock issuable upon exercise of options
and 50,000 shares of common stock that are the subject of PARS, which
options and common stock will not vest within 60 days of October
___,
2007.
|
|
(3)
|
Includes
674,000 shares of common stock owned by I NET Financial Management,
Ltd.,
which is 51% owned by Mr. Ching and 49% owned by Mr. Hahn. Each
disclaims beneficial ownership of the other’s interest. Also includes
120,000 shares held by BLA Opportunities LLC, which is controlled
by Bruce
Hahn’s wife for the benefit of Mr. Hahn’s adult and minor children.
Mr. Hahn disclaims any beneficial ownership in these shares. Does not
include 25,000 shares of common stock issuable upon exercise of options
and 75,000 shares of common stock that are the subject of PARS, which
options and common stock will not vest within 60 days of October
___,
2007.
|
|
(4)
|
Does
not include 25,000 shares of common stock issuable upon exercise
of
options and 50,000 shares of common stock that are the subject of
PARS,
which options and common stock will not vest within 60 days of October
___, 2007.
|
|
(5)
|
Includes
674,000 shares of common stock owned by I NET Financial Management,
Ltd.,
which is 51% owned by Mr. Ching and 49% owned by Mr. Hahn. Each
disclaims beneficial ownership of the other’s interest. Does not include
25,000 shares of common stock issuable upon exercise of options and
50,000
shares of common stock that are the subject of PARS, which options
and
common stock will not vest within 60 days of October ___,
2007.
|
|
(6)
|
Includes
11,764 shares of common stock issuable upon conversion of our Series
A
preferred stock, 17,500 shares of common stock issuable upon exercise
of
options and 4,706 shares of common stock issuable upon exercise of
warrants. Does not include 7,500 shares of common stock issuable
upon
exercise of options, which will not vest within 60 days of October
___,
2007.
|
|
(7)
|
Includes
23,529 shares of common stock issuable upon conversion of our Series
A
preferred stock, 17,500 shares of common stock issuable upon exercise
of
options and 9,412 shares of common stock issuable upon exercise of
warrants. Does not include 7,500 shares of common stock issuable
upon
exercise of options, which will not vest within 60 days of October
___,
2007.
|
|
(8)
|
Includes
5,882 shares of common stock issuable upon conversion of our Series
A
preferred stock, 17,500 shares of common stock issuable upon exercise
of
options and 2,353 shares of common stock issuable upon exercise of
warrants. Does not include 7,500 shares of common stock issuable
upon
exercise of options, which will not vest within 60 days of October
___,
2007.
|
|
(9)
|
Includes
11,764 shares of common stock issuable upon conversion of our Series
A
preferred stock and 4,706 shares of common stock issuable upon exercise
of
warrants held by the Robert Picow Irrevocable Trust. Also includes
17,500
shares of common stock issuable upon exercise of options and 8,000
shares
of common stock issuable upon exercise of warrants. Does not include
7,500
shares of common stock issuable upon exercise of options, which will
not
vest within 60 days of October ___,
2007.
|
|
(10)
|
I
NET Financial Management, Ltd. is 51% owned by Yu Wen Ching, our
President
of Manufacturing and Sourcing, and 49% owned by Bruce Hahn, our Chief
Executive Officer. Each disclaims beneficial ownership of the other’s
interest.
|
|
(11)
|
Based
on information contained in a Schedule 13G filed by Jack Silver on
February 10, 2006, such shares of common stock include (i) 290,000
shares held by Sherleigh Associates Inc. Defined Benefit Pension
Plan, a
trust of which Mr. Silver is the trustee, and (ii) warrants to
purchase 290,000 shares held by Sherleigh. The Schedule 13G states
that Mr. Silver has the sole voting and dispositive power with
respect to all 580,000 shares.
|
|
(12)
|
Does
not include 25,000 shares of common stock issuable upon exercise
of
options and 50,000 shares of common stock that are the subject of
PARS,
which options and common stock will not vest within 60 days of October
___, 2007. The Future, LLC is wholly-owned by Tonda
Mullis.
|
|
(13)
|
Based
on information contained in a Schedule 13G filed by Credit Suisse on
May 17, 2007, Credit Suisse has shared voting and dispositive power
with
respect such shares. The number of shares reflects 2,000 shares of
Series
A preferred stock convertible into 1,176,470 shares of common stock
and
warrants exercisable into 470,578 shares of common
stock.
|
|
(14)
|
Includes
40,000 shares of common stock issuable upon exercise of options and
66,333
shares of common stock issuable upon exercise of warrants. Does not
include 215,000 shares of common stock issuable upon exercise of
options
and 300,000 shares of common stock that are the subject of PARS,
which
options and common stock will not vest within 60 days of October
___,
2007.
|
|
·
|
Our
consolidated balance sheets as of June 30, 2006 and 2005, and the
related
consolidated statements of operations, stockholders’ equity, and cash
flows for each of the years in the three-year period ended June 30,
2006,
and the notes thereto contained on pages F-1 — F-23 of our 2006 Annual
Report;
|
|
·
|
The
section captioned “Management’s Discussion and Analysis of Financial
Condition and Results of Operation” contained on pages 21 — 29 of our 2006
Annual Report; and
|
|
·
|
The
section captioned “Quantitative and Qualitative Disclosures about Market
Risk” on page 29 of our 2006 Annual
Report.
|
|
·
|
Our
consolidated balance sheets as of March 31, 2007 and 2006, and the
related
consolidated statements of operations, stockholders’ equity, and cash
flows for each of the quarterly periods ended March 31, 2007 and
2006, and
the notes thereto contained on pages 4 — 17 of our 2007 Quarterly
Report;
|
|
·
|
The
section captioned “Management’s Discussion and Analysis of Financial
Condition and Results of Operation” contained on pages 18 — 23 of our 2007
Quarterly Report; and
|
|
·
|
The
section captioned “Quantitative and Qualitative Disclosures about Market
Risk” on page 24 of our 2007 Quarterly
Report.
|
|
ý
|
|
Please
mark
your
votes as
indicated
in
this
example
|
|
|
|
1.
|
To
ratify ATS’ sale and issuance on January 30, 2007 of 5,000 shares of its
8% Series A cumulative convertible preferred stock and warrants to
purchase an aggregate of 1,373,318 shares of its common
stock.
|
|
o FOR
|
o AGAINST
|
o ABSTAIN
|
|
2.
|
To
transact such other business as may properly come before the
meeting.
|